(Dec. 23, 2020) New requirements for certain transactions involving convertible virtual currency (CVD) or digital assets with legal tender (LTDA) status were proposed by the Treasury’s financial crimes arm today, which would require financial institutions to submit reports, keep records and verify customer identifies under certain circumstances.
The proposal is meant to curb the use of virtual currencies to move illicit funds.
The Treasury’s Financial Crimes Enforcement Network (FinCEN) said its proposal would affect transactions involving assets that are held in both “hosted” wallets (those held at a credit union or bank) as well as “unhosted” wallets (those that are not hosted by a third-party financial institution).
Under the proposal by FinCEN (which is taking comments until Jan. 4), credit unions and banks would be required to file a report to the agency with certain information related to a CVD or LTDA transaction and counterparty, and to verify the identity of their customer, if a counterparty to the transaction is using an unhosted or otherwise covered wallet and the transaction is greater than $10,000.
Financial institutions would also be required to keep records of a customer’s CVC or LTDA transaction and counterparty—including verifying the identity of their customer—if a counterparty is using an unhosted or otherwise covered wallet and the transaction is greater than $3,000.
The proposal does not, FinCEN said, modify the regulatory definition of “monetary instruments” or otherwise alter existing anti-money laundering regulatory requirements applicable to monetary instruments.